There are six MLB teams that are anticipated to pay the luxury tax this year, according to payroll reports obtained by USA Today. Predicated on that report, not only will the Yankees be paying the luxury tax – a common pastime at this point – but five other clubs will be signing up for them in doing this.
Those five various other teams will be the Dodgers, Red Sox, Tigers, Cubs, and Giants. Their 2017 payrolls, which will be based off of the average total annual value of agreements in addition to bonuses out of this season, are $244 million, $187.9 million, $190.4 million, $186.5 million, and $186.4 million, respectively. The Yankees put in $209.3 million and will be paying the tax for the 15th straight season.
This year’s luxury tax threshold was set at $195 million and if you are thinking “but wait, only two of the above teams spent more than that” you’d be correct.
Unfortunately for those clubs, benefits are also included in the final tally, which amount to about $13 million for a 40-man roster along with what they spent on salary and bonuses.
And they would have gotten away with it too, if it weren’t for that meddling CBA!
Besides teams having to pay the tax itself, this year being in the luxury tax also impacts how qualifying offer payment works, which you can read about here. But in short, if the team is on the signing side of a player that rejected a qualifying offer, it works like this:
If a team went over the luxury tax the growing season before, it loses its second- and fifth-highest picks in the next year’s draft. In addition, it loses $1 million from its international bonus pool area money. If these clubs sign more than one free agent that declined a qualifying present, it loses its third- and sixth-highest draft picks on top of that.
And if they are on the rejection side of a qualifying present, it works like this:
If the team that loses a free of charge agent after extending a qualifying offer pays the luxury tax, their compensation pick will come following the fourth round is over. If they didn’t, and also didn’t receive revenue sharing, that pick will come after Competitive Balance Round B.
So it definitely makes more of a difference when going into free agency than it did in previous years.
Next year, the threshold is expected to be slightly higher at about $197 million, so there’s a chance many of these teams avoid paying out the tax if their books stay a comparable. For the present time, they’re all paying up though.